Conrad Asia Energy, an Asia-focused natural gas exploration and development company, today provides an overview of activities for the quarter ending 30 June 2024.

Progress continued in maturing the Mako project in the Duyung production sharing contract (“PSC”) during the Quarter, with key developments including: 

• Conrad advanced the procurement of all major contracts and services with this process ongoing and expected to conclude in the coming months. Inflationary pressures that have been prevalent in the industry, especially through the COVID period have eased somewhat, with reductions in rig rates and supply lead times.
• On 21 June 2024, Conrad and PT Perusahaan Gas Negara Tok (“PGN”) entered into a binding gas sales agreement (“GSA”) for the domestic portion of the gas produced from the Mako field required as the Domestic Market Obligation (“DMO”) under the Duyung PSC as set out in the Mako revised Plan of Development (“POD”). Delivery of gas under this GSA is subject to the buyer’s construction of a pipeline connecting the West Natuna Transportation System (“WNTS”) with the domestic gas market in Batam. To date, this project has not been approved by the buyer.
• The total contracted gas volume under the PGN GSA is up to 124 billion standard cubic feet (“Bcf”) with estimated plateau sales gas rates of 35 million standard cubic feet / day (“mmscfd”). The terms of the GSA are confidential.
• The remainder of the Mako sales gas volume is targeted to be sold to a Singapore utility. Conrad is working towards finalising a GSA for the Mako export gas over the coming weeks.
• These agreements represent important stepstowards the Mako development final investment decision (“FID”) targeted for 2024 year-end. Production start-up is targeted for end 2026, or earlier if possible.
• The Duyung farm down process progressed with the Company engaged in confidential discussions.
• Indicative proposals have been received from several potential financial institutions to help fund Conrad’s debt funding of Mako project costs. A preferred institution has been selected.

Key developments in the Offshore North West Aceh ("ONWA") and Offshore South West Aceh ("OSWA") PSCs include: 

• Planning continues for the acquisition of up to 500 sq km of modern 3D seismic data in each PSC, seeking to enhance definition of existing discoveries and delineate near field, low-risk drilling opportunities in the shallow-water areas. Evaluation of deep-water prospective targets (lead inventory of circa 11 trillion cubic feet (“Tcf”) of recoverable gas, P50, net attributable to Conrad) is ongoing.
• Under the memorandum of understanding (“MOU”) signed with PGN to cooperate in the provision of gas or LNG supply and development infrastructure for gas resources from its ONWA and OSWA PSCs, the parties have commenced examination of commercialisation options for the discovered gas resources in the two PSCs.

Conrad Managing Director and Chief Executive Officer, Miltos Xynogalas, commented: 
"The second quarter was another busy period for the Company on many fronts as we continued to advance the Mako project by addressing numerous, complex commercialisation issues for this strategic international gas project. As shared during our recent AGM, our focus has been finalising the underwriting GSAs between the Mako Joint Venture, the Indonesian Government, and gas buyers5 . These agreements are the essential documents that demonstrate financial viability of the Mako project, which in turn underwrite value and financial sustainability. The signing of a binding GSA with PGN6 for the domestic portion of Mako’s gas is an important step for Conrad in commercialising the gas field and building our gas business in Indonesia. Conrad has been working closely with PGN for the purchase of Mako gas and is delighted to have progressed this to a formal GSA. This GSA is a significant milestone on the road to FID which is targeted for Q4 of the current year. Detailed, comprehensive and substantive GSA negotiations continue with the Singapore gas buyer. I am pleased to say that these negotiations are at an advanced stage and there is impetus and a willingness by all parties to endeavour to close this agreement in the near term.”

KeyFacts Energy: Conrad Indonesia country profile